Reliance Gold ETF – Review of Performance(NAV History,Symbol),Holdings,Expense Ratio,Investing in SIP

INTRODUCTION

Reliance Gold ETF is an open-ended Gold Exchange Traded Fund. It started on 22nd November 2007. The investment objective is to seek to provide returns that closely correspond to returns provided by price of gold through investment in physical Gold and Gold related securities .The prices of Reliance Gold ETF is  affected by several factors such as global gold supply and demand, investors’ expectations with respect to the rate of inflation, currency exchange rates, interest rates, etc.  Minimum of one unit can be traded by the investors.The Creation Unit is 1000 units that is if you have 1 kg of gold ETF that is about Rs 26 lakhs you can exchange your paper gold into physical gold from the AMC.

Reliance Gold ETF NAV and Calculation

NAV  is the Net Asset Value per Unit at the close of the Business Day on which the application for purchase or redemption/switch is received at the designated investor service centre and is considered accepted on that day. The NAV under RGETF shall be calculated up to 4 decimals as follows or such other formula as may be prescribed by SEBI from time to time. The NAV of the Scheme will react to the prices of gold, Gold Related Instruments and stock market movements.

NAV = Market or Fair Value of Scheme’s investments + Current Assets – Current Liabilities and Provision Number of Units outstanding under Scheme on the Valuation Date.The NAV of the Scheme will be calculated and declared by the Fund on every Working Day by 9.00 p.m. The information on NAV may be obtained by the Unitholders, on any day from the office of the AMC or any of the other Designated Investor Service Centres.The NAV on 20th October 2011 was Rs.2477.05850

Reliance Gold ETF Expense Ratio

Expense Ratio – The total expense ratio is 1.5% which is too high given its poor performance and better gold ETFs at 1% expense ratio.The fund used to charge 2.5% before the SEBI stopped the high charging of expenses by mutual funds.

Reliance Gold ETF Benchmark

RGETF shall be benchmarked against the price of Gold.Purity of Gold – All gold bullion held in the scheme’s allocated account with the custodian shall be at least 99.5% pure.

Reliance Gold ETF Symbol

Symbol – RGETF .The Plan is Dividend payout Option and is Available for trading on both the main exchanges of India National Stock Exchange Of India Ltd (NSE) and Bombay Stock Exchange Limited (BSE)

Reliance God ETF Unit

Pricing (per unit): 1 Unit=Approx. 1 gram of gold

Fund Manager – Hiren Chandaria

Reliance Gold ETF Performance –

Since inception:
Return on  Investment in Scheme (%) 21.53%
Return on Investment in Benchmark (Gold Price) (%) 23.51%

July 2010 – June 2011:
Return on Investment in Scheme (%) 15.19%
Return on Investment in Benchmark (Gold Price) (%) 16.27%

RGETF performance has been pretty mediocre and almost 2 percentage points below its benchmark which is one of the poorest performances amongst its peer in gold etfs in India

Reliance Gold ETF Asset Allocation

Gold 995 1 Kg Bar : 100.59%
Cash & Other Receivables : -0.59% (As on 31st July 2011)

As per the SEBI guidelines, the fund invests in in gold or gold related instruments primariy.It is also allowed to invest in securitized debt, other debt securities, bonds and money market instruments as permitted by regulators . The Fund  purchases Gold Bars from the RBI Authorised Banks and Agencies that are Refined at LBMA Registered Refiners (Updated list of the Refiners can be obtained from the LBMA Website – www.lbma.org.uk).

Reliance Gold ETF Systematic Investment Plan (SIP) 

The benefits of an SIP is known to all. One can make investments as small as Rs 100, monthly or quarterly. It means a commitment to invest a fixed amount in a fixed time. The ETFs do not currently give an option of investing through SIPs. However, one can easily do so with his own will. Set a particular amount to be invested every month by setting reminders. This way, one can enjoy the benefits of SIP. One can also talk to his broker to allow SIP. Some brokers like Religare give the facility of SIP investing in shares & ETFs.

Reliance gives the option of SIP on its gold mutual fund which is not an ETF but invests in gold shares .

Other Details about the Scheme:

The Scheme shall have a minimum of 20 investors and no single investor shall account for more than 25% of the corpus of the Plan. The Trustee may, limit the total number of Units which may be redeemed on any Business Day to 5% of the total number of Units then issued and outstanding. The Trustee may use its sole discretion in response to unforeseen circumstances or unusual market conditions.

Reliance Gold ETF Sponsor,Trustee and Custodian

The Trustee has appointed Deutsche Bank, approved by SEBI to act as Custodian for Gold exchange traded funds. It does not have any power or authority to sell or deal with the securities held by it on behalf of the Fund except as instructed by the AMC.

Sponsor: Reliance Capital Limited.

Trustee: Reliance Capital Trustee Co. Limited.

Investment Manager: Reliance Capital Asset Management Limited.

Gold ETF India Fund Comparison

Best Gold ETF in India

Benchmark Gold ETF Gold BeEs is the best ETF option amongst the ETFs available in India due to its very low expense ratio of 1% compared to the 2.5% charged by most of the other ETFs.Note Benchmark is the best asset management company in terms of the variety and expense of ETFs.I would recommend Gold BeEs is the preferred investment vehicle of choice for buying Gold in India.Last of all Gold BeEs has the most volume which means it has the least impact cost while buying and selling the Gold ETF.Reliance Gold ETF – Review of Performance(NAV History,Symbol),Holdings,Expense Ratio,Investing in SIP

Worst Gold ETF in India

The worst Gold ETFs are UTI and SBI due to their high expense ratios and poor performance.I don’t know why these AMCs have to charge 1.5-2.5% for a passive thing as buying gold.This is a case of looting of retail investors who don’t have enough financial literacy I guess.There is no rhyme or reason for charging so much money for an ETF.The whole purpose of an ETF is to charge less as you are investing passively by following a benchmark.Relaince Gold ETF is also not good because of the higher expense ratio

READ about Gold ETFs in India